MGT101 - Financial Accounting - I - Lecture Handout 13

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VOUCHERS AND POSTING TO LEDGERS ACCOUNTS

Learning Objectives:

After studying this lecture, you should be able to:

  • Understand different types of vouchers.
  • How to book entry in voucher?
  • Carrying forward the balance of an account.

Voucher

In book keeping, voucher is the first document to record an entry. Vouchers are the documentary evidence of each financial transaction. Normally three types of vouchers are used:

  • Receipt voucher
  • Payment voucher
  • Journal voucher

Receipt Voucher

Receipt voucher is used to record cash or bank receipt. Receipt vouchers are of two types:

  • Cash receipt voucher
  • Bank receipt voucher

Cash receipt voucher denotes receipt of cash. Bank receipt voucher indicates receipt of cheque or demand draft. Standard format of cash receipt voucher is given below:

Name of the Organization
Bank Receipt / Cash Receipt OR Receipt Voucher
Date: No:
Cash / Bank code: Description / Title:
Description /
Title of Account
Code
#
Credit
Amount
     
     
     
Total:    
Narration:
Prepared By: Checked By:

Payment Voucher

Payment voucher is used to record a payment of cash or cheque. Payment vouchers are of two types:

  • Cash Payment voucher
  • Bank Payment voucher

Cash Payment voucher denotes Payment of cash. Bank Payment voucher indicates payment by cheque or demand draft. Standard format of cash Payment voucher is given below:

Name of the Organization
Bank Payment / Cash Payment OR Payment Voucher
Date: No:
Cash / Bank code: Description / Title:
Description /
Title of Account
Code
#
Debit
Amount
     
     
     
Total:    
Narration:
Prepared By: Checked By:

Journal Voucher

Journal voucher is used to record transactions that do not affect cash or bank. Standard format of journal voucher is given hereunder:

Name of the Organization
Journal Voucher
Date: No:
Cash / Bank code: Description / Title:
Description /
Title of Account
Code
#
Debit
Amount
Credit Amount
       
       
       
Total:      
Narration:
Prepared By: Checked By:

How to Carry Forward a Balance?

It is already mentioned that in ‘T’ account, at the end of accounting period, if one side is greater than the other side, balancing figure will be written on the lesser side as balance. For instance, if amount on debit side is greater than the amount on credit side, the balancing figure is written on the credit side as balance & it is known as Debit Balance. On the other hand, if amount on the credit side is greater than that of amount on the debit side, the balance is shown on the debit side. It is called the Credit Balance.

At the start of next accounting period, these balances are carried forward. Debit balance is written on the credit side, but it is the excess of debit side over the credit side, when it is carried forward, it is written on the debit side. For example, ledger account of cash is given below:

Cash Account Account code # 1
Date Particulars Code
#
Dr.
(Rs.)
Date Particulars Code
#
Cr.
(Rs.)
1-3-02
13-3-02
21-3-02
Capital a/c
Sales a/c
Received from
debtors
02
07
08
150,000
12,000
25,000
5-3-02
7-3-02
10-3-02
21-3-02
23-3-02
25-3-02
29-3-02
Office furniture
Purchases a/c
Carriage a/c
Paid to creditors
Salaries a/c
Rent a/c
Stationery a/c
03
04
05
06
09
10
11
2,000
9,000
250
7,000
2,500
3,000
2,000
          Balance   161,250
  Total   187,000   Total   187,000

This cash account is showing the balance of Rs. 161,250 on the credit side. This balance is excess of debit side over the credit side and, therefore, is called the debit balance.
When it is carried forward it is written on the debit side because debit side of the cash account is greater & Rs. 161,250 is the balancing amount of the debit side of cash account. So, it is an asset & it will be used for further expenses in the forth coming period.

Let’s take another example:

Accrued Expenses Account Account code # 13
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
31-3-02

 

Balance

  5,000   Accrued bills 12 5,000
  Total   5,000   Total   5,000

In this account, balance is written on the debit side & it is called the credit balance. As this balance represents excess of credit side over debit side, when it is carried forward it is again written on the credit side.
It can also be explained like this:

  • Debit balance when carried forward, is written on the debit side
  • Credit balance when carried forward, is written on the credit side

This is further explained with the help of the following solved illustration:

Illustration

Following is the Trial Balance of Saeed & Sons for the month ended January 31, 2002

Saeed & Sons.
Trial Balance As on January 31, 2002
Title of Account Code Dr. Rs. Cr. Rs.
Cash Account 01 55,000  
Accrued expense Account 02   10,000
Bank Account 03 25,000  
Loan Account 04   100,000
Furniture Account 05 20,000  
Office Equipment 06 10,000  
Total   110,000 110,000

In the month of February, following transactions took place:

No. Date Particulars
01 Feb 07 They purchased stationery worth of Rs. 5,000
02 Feb 10 They paid their first installment of loan Rs. 10,000
03 Feb 12 They received a cheque from a customer of Rs. 5,000
04 Feb 17 Accrued expenses of Rs. 5,000 are paid.
05 Feb 20 They purchased furniture of Rs. 1,000
06 Feb 23 Office equipment of Rs. 2,000 is sold
07 Feb 25 Staff salaries are paid by cheque Rs. 10,000
08 Feb 28 Sold goods for cash Rs.2,000

Solution: The ledger accounts of Saeed & Sons will bear the following changes:

Cash Account Account code # 1
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
1-2-02
23-2-02
28-2-02
Balance c/f
Office
equipment.
Sales a/c
06
01
55,000
2,000
2,000
7-2-02
10-2-02
17-2-02
Stationery
Loan a/c
Accrued expenses
Furniture a/c
Balance c/d
10
04
02
05
5,000
10,000
5,000
1,000
38,000
  Total   59,000   Total   59,000

 

Accrued Expenses Account code # 2
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
17-2-02 Accrued expenses
Balance c/d
01 5,000
5,000
1-1-02 Balance c/f   10,000
  Total   10,000   Total   10,000

 

Bank Account Account code # 3
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
17-2-02
12-2-02
Balance c/f
Cheque received
01
07
25,000
5,000
25-2-02 Salaries a/c
Balance c/d
  10,000
20,000
  Total   30,000   Total   30,000

 

Loan Account Account code # 4
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
10-2-02 Installment paid
Balance c/d
01 10,000
90,000
  Balance c/f   100,000
  Total   100,000   Total   100,000

 

Furniture Account Account code # 5
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
10-2-02
20-2-02
Balance c/f
Furniture a/c
01 20,000
1,000
23-2-02 Balance c/d   21,000
  Total   21,000   Total   21,000

 

Office Equipment Account Account code # 6
Date Particulars Code
#
Amount
Rs. (Dr.)
Date Particulars Code
#
Amount
Rs. (Cr.)
10-2-02 Balance c/f   10,000   Office Equipment
Balance c/d
01 2,000
8,000
  Total   10,000   Total   10,000

Balance C/F is balance carried forward & Balance C/D is balance Carried down.

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